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14 A history of land grabs land grabs maltatoday | SUNDAY • 13 JANUARY 2019 NEWS THE only direct parallel to the proposed Corinthia deal which would see the government remove a condition limiting development on leased public land to tourism purposes was the Portomaso pro- ject, which was approved in 1996 after the then-PN government ac- cepted a pittance for the removal of the clause that limited develop- ment to touristic purposes. But the idea of sub- sidising developers by handing them cheap public land dates back to the 1960s when the newly independent na- tion was still building its tourism industry. A Cabinet memo issued in July 1969 reveals the extent to which government was assisting hotel- iers at the time. The government was faced with a request for a £400,000 grant for the develop- ment of a 690-room hotel in Zeb- bug, Gozo. The request was made by the Pisani brothers, who prom- ised to spend £1.4 million on the new hotel, which would have cre- ated 400 new jobs. But the memo points out that the Pisanis had already been granted £173,333 for the development of the 320-bed Corinthia Palace in Attard. They were also granted income tax relief for ten years and exemption from customs duty on construction material used in build- ing the hotel. The Malta Develop- ment Corporation had instructed the government that no additional financial assistance could be given to any applicant who had already received assistance, unless Cabinet approved this. In this way the pic- turesque Xwejni bay in Gozo was spared from hotel development. Similarly, both the Corinthia San Gorg and the Island Hotels Group's Radisson were built on land grant- ed to developers for tourism pur- poses after 1987, with the former development even encircling a his- torical tower. Subsequently, under PN govern- ments this policy was extended to subsidise developments which also included a residential com- ponent. These ranged from exclu- sively residential projects like Fort Cambridge to mixed developments like Smart City, which was mainly proposed as an IT village but also included a residential component. This was one policy retained by Jo- seph Muscat and applied to the DB group's and the Corinthia projects in St George's Bay. Since 1995 a total of seven pro- jects which also included a resi- dential component, have been proposed on public land. Land was also allocated to the American University at Zonqor, but the pro- ject's deed limits the use of land to educational facilities. 1. Corinthia project • Direct Payment to government: €17 m • Total sum to be paid: €51.4 m (includes ground rent and conversion of leases) • Annual ground rent: €195,120 • Land area: 70,334 sq.m • Number of apartments: Still to be determined. 100,000 sq.m is to be located for residential and commercial development. Corinthia Group will be paying the government an upfront sum of just €17 million to build up to 100,000 square metres of resi- dential and office property in St George's Bay. The project, which will also include a 6-star hotel will require changes to the local plan which limits development in the area to tourism development. While the project was valued at €121 million, International Hotel Investments plc, which owns the Corinthia chain, was also given a hefty 57% cut on the total land 3. Portomaso • Direct payment to government: None • Total sum paid to government: €1.8 m (redemption of lease) • Annual ground rent: €445,000 (re- deemed in 2006) • Land Area: 38,750 sq.m • Number of apartments: circa 500 The Hilton Hotel took off in 1964, when the Maltese government granted 31 acres of land to Spinola Development Co. Ltd for a period of 150 years, against a pay- ment of Lm34,000 (€79,000) and an an- nual rent of Lm1,000 (€2,300). The hotel and site were later bought by the Fenechs of the Tumas Group and, in 1995 and 1996, planning permits for the Portomaso project were issued with the support of both PN and MLP representatives of the PA board. The entire area was leased by the State to the developers for €445,000 a year until 2114. It was eventually sold to the de- velopers for €1.8 million in 2006, which pales into insig- nificance when considering the going rate for the luxury apartments the developers were allowed to build. Ombudsman Joe Sammut, who commenced an investi- gation triggered by a hunger strike by left-wing activists, reprimanded the government's failure "to use its negotiat- ing powers to maximise the benefits to be derived from the deal". The Ombudsman's intervention proved crucial in subsequent changes to the law, obliging the government to seek Parliament's consent before passing public land to private interests. 4. Pender and Mercury House • Direct payment to government: €25 million • Total sum due to govern- ment: NA • Annual ground rent: NA • Land area: 18,000 m2 • Number of apartments: 219 Penderville Limited had won the 2005 concession for the Pender and Mercury sites for Lm10.6 million (€24 million), seeing off the owners of the St George's Park site as their main rivals for the concession. In 2007, an application for the development of the two sites value of the St George's Bay pen- insula, for having acquired the neighbouring Radisson hotel af- ter their acquisition of the Island Hotels Group, which will now be demolished. 2. DB Group's City Centre • Direct payment to government: €15 million • Ground rent: €1.5 million • Total sum to be paid: €60 million (includes ground rent and conversion of leases) • Land area: 24,000 sq.m • Number of apartments: 209 While the land at Corinthia was already leased since the 1990s to the IHI group for tourism purposes, the ITS land was leased to Silvio Debono's DB Group after a request for proposals (RFP). The call's ti- tle was 'for a project of upmarket mixed tourism and leisure develop- ment' but it also foresaw that 'the project may also include a number of residential units'. The govern- ment initially announced that the price tag for the project was €60 million. But a breakdown of figures confirms that that the direct pay- ment (premium) would only con- sist of €15 million, €5 million paid in the first year and the rest over seven years, interest-free. €23.3 million will be paid to the State upon the redemption of the land by the individual buyers of apartments while the rest will consist in ground rents which will be paid over the next century. Ever since Malta's Independence, public land has been granted at the cheap to fat cats and big developers in return for trickle-down enrichment. JAMES DEBONO compares the Corinthia deal with the other deals land grabs A history of A history of